India's sugar export quota at risk as mills avoid low-priced global market

Indian sugar mills are struggling to secure export deals as global prices remain below domestic rates, discouraging new contracts and making it unlikely they will ship the entire 1.5-million-metric-ton export quota, trade officials told Reuters.

A smaller export volume from India, the world's second-largest sugar producer, could help support global prices, which are trading near their lowest level in five years.

New Delhi earlier this month allowed exports of 1.5 million metric tons in the current season, which started on Oct. 1, as a decline in the diversion of sugar for ethanol production is expected to leave a larger domestic surplus.


NO INCENTIVE FOR EXPORTS

"Mills aren't interested in exporting right now because global prices are lower than domestic prices. There's no incentive for exports," said Rahil Shaikh, managing director of MEIR Commodities India.

"They'll return to the export market only if global prices rise or if local prices fall closer to global levels."

Indian sugar is offered around $450 per ton on a free-on-board (FOB) basis, or nearly $25 per ton above benchmark London futures, four dealers with trade houses said.

Mills have so far contracted around 10,000 tons of sugar for shipments to Afghanistan and East African countries, said a New Delhi-based dealer with a global trade house.

Higher-quality sugar is now cheaper on the world market than Indian supplies, but in the first quarter of 2026 buyers will still depend on India as Brazil, the top producer, will be off the market, the dealer said.

Sugar-cane crushing in Brazil usually runs between April to November.

ASIA, AFRICA DEMAND LIKELY TO GROW IN NEW YEAR

Sugar demand is likely to jump from Asian and African countries in January and February ahead of Muslim fasting month of Ramadan, said a Mumbai-based dealer with a global trade house.

Communal feasting during Ramadan, which will begin in mid-February and run through mid-March, typically drives an uptick in sugar consumption.

"We're probably not going to ship out the full quota this year. Unless global prices suddenly jump, which doesn't look likely, exports will likely end up around 800,000 tons," said Shaikh of MEIR Commodities.

In the last marketing year India had allowed exports of 1 million tons but mills managed to export around 775,000 tons.